Simple Interest Calculator
Enter the principal, interest rate and time to calculate simple interest and the total amount.
What Is Simple Interest?
Simple interest is interest calculated only on the original principal amount, not on any interest that accumulates over time. It's commonly used for short-term loans and some savings products because it's easy to understand and predict.
The Formula
Simple Interest (SI) = Principal × Rate × Time ÷ 100, where the rate is the annual interest rate as a percentage and time is measured in years. The total amount repayable is the principal plus the simple interest.
Example
For a principal of $1,000 at an annual rate of 5% over 2 years: SI = 1000 × 5 × 2 ÷ 100 = $100. The total amount would be $1,100.
Frequently Asked Questions
How is simple interest different from compound interest?
Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus any interest already earned or owed.
Can I use months instead of years for time?
This calculator expects time in years. To use months, divide the number of months by 12 before entering it — for example, 6 months is 0.5 years.
Is this suitable for calculating loan interest?
Simple interest is a reasonable estimate for loans that use simple interest terms. Many loans, such as mortgages, actually use compound interest, so check your loan's terms for the exact method used.
How to check this result
Enter the original principal, annual rate and time period using matching units.
Method and assumptions
Simple interest is calculated from principal multiplied by rate multiplied by time. It does not add prior interest into the next calculation.
Before making a decision
This is an estimate for learning and planning; a bank or lender may use fees, daily balances or other rules.
Interest without reinvestment
Method and inputs
Simple interest keeps the original principal as its base. Interest = principal × annual percentage rate × years ÷ 100. To use months, divide the month count by 12 before entering the time in years.
Worked example
For 2,000 at 6% for nine months, time = 9/12 = 0.75 years. Interest = 2,000 × 6 × 0.75 ÷ 100 = 90. Principal plus interest is 2,090.
Limits and common mistakes
The formula does not compound interest or reduce principal after instalments. Contracts may use actual/365, actual/360 or another day-count rule, so short-period amounts can differ from this year-based estimate.
Can I use it for an amortizing loan?
Not to calculate its instalment schedule. Amortizing loans typically charge interest on a changing balance. Use the loan-payment calculator for a fixed monthly-payment estimate.
Content updated: 2026-10-03.